But beyond this, Danish governments of all political stripes clearly understand that skill development is absolutely essential to economic success in the new “knowledge economy.” All market economies face the problem that some crucial collective goods will be underprovided — or not provided at all! — if they only rely the private sector. Skills are one such collective good. Individual firms have good, self-interested reasons not to invest heavily in training of workers who may or may not stay in the firm long enough for the employer to reap the benefits of the investment. To provide collective goods like a highly skilled workforce, we need collective solutions. So beyond the fact that labor is well organized, in Denmark it matters a lot as well that employers are well organized and can act collectively to solve these kinds of coordination problems and that their efforts are generously supported by the government.
